RENOVATION

Renovation describes a series of planned changes and updates made to a
facility where business is conducted. Office and building renovation is a
common undertaking in today's competitive business environment, as
businesses endeavor to keep up with infrastructure needs (especially those
sparked by technology use) and provide aesthetically pleasing settings for
customers.

Small business owners and consultants agree that a well-conceived and
carefully planned renovation effort can revitalize a business and provide
it with much-needed room to grow in the future. But they also note that
renovation periods can have a negative impact on productivity and
profitability. Often, the inconveniences associated with office and
building renovation projects make it a practical impossibility for
businesses to maintain the exact same level of operations that they met
during non-renovation periods. But experts indicate that small business
owners—whether they are building tenants or building
owners—can take several steps to ensure that the negative aspects
of renovation are minimized.

SMALL BUSINESS TENANTS AND RENOVATION

Many small business owners are co-tenants of a building with other
businesses. These entrepreneurs may well find themselves faced with an
impending renovation. This is especially true if they are operating their
businesses in older buildings. Sometimes these renovations take place
within the physical space of the business itself; on other occasions, the
renovation may be limited to common areas—lobbies, outer building
areas, stairways/elevator systems, etc.—that are shared by all the
tenants. In either case, the impending arrival of a renovation crew should
signal a period of preparation on the part of the small business owner.

"Tenants are usually very pleased with the modern conveniences and
new environments that are created after a major office renovation project
has been completed," wrote Lawrence Hearn in the
Journal of Property Management.
But during the period when the renovation is actually taking place, small
business
owners may find themselves feeling everything from anxiety to deep anger
about the impact that it is (or seems to be) having on their company. The
most effective way in which small business tenants can minimize these
negative emotions is by establishing and maintaining good lines of
communication with the building owner before and during the renovation
process.

Hearn stated that good communication between building owners/managers and
tenants is a priority whether the renovation is a minor capital
improvement or a comprehensive rehabilitation project. "Almost any
physical change in the work environment can be disruptive and potentially
threatening to the tenant's business," he added. "It
is management's, and ultimately ownership's, responsibility
to make sure tenants are kept informed every step of the way during
construction."

Hearn noted that smart building managers will take the initiative in
talking with their business tenants so that they are more likely to
"feel as if they are part of the renovation process, instead of
becoming victims of the procedure. Retail tenants are particularly
sensitive to signage and good access to their space." But if you
are a small business owner and you feel that the facility's
ownership is doing an inadequate job of informing you of renovation issues
and schedules, it is entirely within your rights to demand more
information and input. Business owners should make sure that they
thoroughly review their leasing contract, soliciting legal assistance if
necessary, to make sure that they are being treated fairly.

Some business owners inhabiting facilities that are undergoing renovation
adopt a fatalistic sort of attitude toward the process, surrendering
meekly to renovation strategies without offering any workable alternatives
to plans that might unnecessarily hinder their operations. Other
entrepreneurs, meanwhile, err on the other end of the spectrum by making
unreasonable demands that may ultimately drag out the renovation process
for several extra days or weeks. Small business experts counsel owners to
instead adopt a middle ground. They have to recognize that renovation
efforts almost inevitably bring about some measure of inconvenience for
tenants and their customers, but that they ultimately increase the value
of the location for business operation. On the other hand, if a business
owner spots a problem during a review of upcoming or ongoing renovation
plans, he or she should bring it to the attention of building management.
A renovation strategy that would render a key loading dock unavailable
during a big delivery period, for example, should immediately be brought
to the attention of the landlord.

Small business owners should recognize that many facility managers want to
help tenants out in whatever way they reasonably can. After all, they do
not want to lose tenants and go to the trouble of finding new ones. As
Hearn pointed out to facility owners, "although it may cost more,
it is sometimes wiser to schedule work in high service areas at night or
on the weekends. The same holds true for heavy pounding or other work that
requires large equipment. You will certainly make up the cost difference
if you keep your tenants happy and away from the construction headache as
much as possible."

RENOVATING PROFESSIONAL OFFICES

Office and facility renovations may also be undertaken by small business
enterprises that either own or are the sole tenants of the building in
which they operate. Business owners that provide professional services are
especially likely to renovate to meet changing internal demands, attract
new clients, and keep existing ones. Indeed, doctors, dentists, attorneys,
architects, engineers, and the like recognize that the appearance of their
offices can be a significant component in their overall success.
"With competition up and reimbursements down, a medical office
that's shabby, impedes productivity, or can't accommodate
expansion plans can be a big liability," cautioned Laura Clark in
Medical Economics.

Analysts note that professional offices are more likely to renovate rather
than relocate for two fundamental reasons: cost and client retention. Even
a major renovation of an existing facility is likely to be considerably
less expensive than the total costs associated with relocating to another
facility. Perhaps even more importantly, existing patients and clients are
accustomed to finding the office at a given location. "If you move,
they may not follow you," warned one consultant in
Medical Economics.

Renovation strategies can vary considerably, depending on the needs and
concerns of the office in question. A medical practice or architectural
firm may be amply equipped to integrate new technology with existing
operations, only to recognize that its growth has been hampered because it
is saddled with an unattractive waiting area. In this situation, the
renovation may amount to little more than some new carpeting, wallpaper,
and furniture. Other firms, however, may find that only a major
rehabilitation effort will be sufficient to correct long-standing problems
with infrastructure such as an ineffective floor plan, poor wiring to
support information technology needs, or cramped office space.

Clark pointed to several other concerns that professional service firms
(and many other businesses) have to consider when weighing renovation
plans as well. For example, businesses have to be in compliance with the
Americans with Disabilities Act of 1990. Much of the renovation work that
took place in
the early 1990s was undertaken specifically to address this law, which
called on facilities to become fully accessible by widening hallways,
installing ramps, and adapting drinking fountains and bathrooms for use by
people in wheelchairs. Most buildings are now in compliance with the ADA,
but building owners looking to renovate need to make sure that their new
plans adhere to ADA parameters. In addition, professional service firms
need to factor in their attractiveness to recent graduates when weighing
their renovation strategies. "Young men and women coming out of
residencies are going to consider the attractiveness and efficiency of
your office," one renovator told
Medical Economics.
"They're simply not going to want to come to work in a
dingy, 1940s-style medical building."

Finally, before committing to a major renovation effort, professional
service firms should discuss matters with appropriate experts, including
architects, accountants, and lenders. Selecting a contractor should be
done carefully as well; business owners are urged to check into the
contractor's reputation for quality, timeliness, and financial
soundness before making an agreement. Finally, firms should call in legal
representation before signing a contract. As one renovation expert
indicated in
Medical Economics,
"[attorneys] should write all kinds of ceilings and floors into
your contract so you don't get burned. Believe it or not, you can
force your contractors to stay on schedule and within budget—or pay
a penalty—but you've got to show them you're very
serious about that right up front."